PML INC
10QSB, 2000-03-31
PHARMACEUTICAL PREPARATIONS
Previous: HENLEY HEALTHCARE INC, NT 10-K, 2000-03-31
Next: BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC, DEF 14A, 2000-03-31



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549




                                   FORM 10-QSB




                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2000


                           Commission File No. 0-21816


                                    PML, INC.
                 (Name of small business issuer in its charter)



            Delaware                                   93-1089304
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
  incorporation or organization)



                              27120 SW 95TH Avenue
                            Wilsonville, Oregon 97070
          (Address of principal executive offices, including zip code)

                                 (503) 570-2500
                           (Issuer's telephone number)


Indicate by check mark whether the issuer (1) has filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange Act during the past
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No

As of March 30, 2000 there were 1,780,441  shares of Common Stock with $0.01 par
value  outstanding,  and  211,551  Class B Common  Shares  with  $0.01 par value
outstanding.


<PAGE>
                                    PML, INC.

                                      Index


Part I.   Financial Information

          Item 1.     Financial Information                                 2
                      Consolidated Balance Sheets                           3
                      Consolidated Statements of Operations                 4
                      Consolidated Statements of Stockholders' Equity       5
                      Consolidated Statements of Cash Flows                 6
                      Notes to Consolidated Financial Statements            7

          Item 2.     Management's Discussions and Analysis of
                      Financial Condition and Results of Operations         8


Part II.  Other Information

          Item 1.     Legal Proceedings                                     11
          Item 4.     Submission of Matters to a Vote of Security Holders   11
          Item 6.     Exhibits and Reports on Form 8-K                      11

          Signatures                                                        11




<PAGE>

Part I. FINANCIAL INFORMATION



                          Item 1. Financial Statements

                                ----------------


                                    PML, INC.
                           For the Third Quarter Ended
                                February 29, 2000















                                       2
<PAGE>
<TABLE>
<CAPTION>
PML, INC.
CONSOLIDATED BALANCE SHEETS

                                                                     Unaudited
                                                                    February 29,              May 31,
Assets                                                                  2000                   1999
                                                                   --------------         --------------
<S>                                                                <C>                    <C>
Current Assets
  Cash                                                             $           -          $         571
  Trade accounts receivable, less allowance for doubtful               2,049,240              2,106,210
    accounts of $55,592 and $50,414
  Inventories                                                          1,478,588              1,670,459
  Deferred income taxes                                                   67,834                209,000
  Prepaid expenses and other current assets                               92,661                 74,675
                                                                   --------------         --------------

     Total Current Assets                                              3,688,323              4,060,915
                                                                   --------------         --------------

Property, plant and equipment - net                                    1,340,987              1,453,222
Intangible assets - net                                                   29,636                 27,469
Deferred income taxes                                                    136,000                136,000
Other assets                                                              23,073                104,768
                                                                   --------------         --------------

     Total Assets                                                  $   5,218,019          $   5,782,374
                                                                   ==============         ==============

Liabilities and Stockholders' Equity

Current Liabilities
  Accounts payable                                                 $     809,745          $   1,596,512
  Accrued Payroll and Related                                            472,954                312,964
  Other accrued liabilities                                              551,392                300,948
  Notes payable - related parties                                        247,551                247,551
  Bank line of credit                                                  1,591,720              1,714,450
  Current portion capital lease obligations                               69,354                 70,153
  Current portion of borrowings - related parties                         60,615                 77,891
  Current portion of borrowings                                          348,217                355,852
                                                                   --------------         --------------

     Total Current Liabilities                                         4,151,548              4,676,321
                                                                   --------------         --------------

Capital lease obligations, less current portion                                -                 52,145
Borrowings - related parties, less current portion                        35,821                 58,985
Borrowings, less current portion                                          50,000                257,911
                                                                   --------------         --------------
     Total Borrowings. less current portion                               85,821                369,041
                                                                   --------------         --------------

Commitments and contingencies                                                  -                      -
                                                                   --------------         --------------

Stockholders' Equity
  Preferred stock, $.01 par value; authorized 25,000 shares,
    no shares issued or outstanding                                            -                      -
  Class A convertible preferred stock, stated and liquidation
    value $100 per share; authorized 7,500 shares, issued and
    outstanding 4,950 shares, including accreted dividends               774,550                738,296
  Common stock, $.01 par value; authorized 2,500,000 shares,
    issued and outstanding 1,780,441 shares                               17,804                 17,804
  Class B common stock, $.01 par value; authorized 250,000 shares,
    issued and outstanding 211,551 shares.                                 2,116                  2,116
  Class D common stock, $.01 par value, authorized 100 shares,
    no shares issued or outstanding.                                           -                      -
  Additional paid in capital                                             146,540                146,540
  (Accumulated deficit) retained earnings                                 39,639               (167,744)
                                                                   --------------         --------------
     Total Stockholders' Equity                                          980,649                737,012
                                                                   --------------         --------------

          Total Liabilities and Stockholders' Equity               $   5,218,018          $   5,782,374
                                                                   ==============         ==============

</TABLE>


The accompanying notes are an integral part of these statements.


<PAGE>
<TABLE>
<CAPTION>
PML, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)





                                               For The Three Months Ended               For The Nine Months Ended
                                             February 29,      February 28,           February 29,      February 28,
                                                2000              1999                   2000              1999
                                           --------------    --------------         --------------    --------------
<S>                                        <C>               <C>                    <C>               <C>
Net sales                                  $   3,511,846     $   3,352,728          $  10,494,889     $  10,260,967

Cost of goods sold                             2,163,033         2,273,331              6,453,895         6,532,764
                                           --------------    --------------         --------------    --------------

     Gross profit                              1,348,813         1,079,397              4,040,994         3,728,203

Operating expenses                             1,111,677         1,205,652              3,455,110         3,734,003
                                           --------------    --------------         --------------    --------------

Operating income (loss)                          237,136          (126,255)               585,884            (5,800)

Other expense
  Interest expense                                65,042            72,960                203,939           238,223
  Other                                          (18,388)         (116,309)               (11,017)           44,801
                                           --------------    --------------         --------------    --------------
     Total other expense                          46,654           (43,349)               192,922           283,024
                                           --------------    --------------         --------------    --------------

Income (Loss) before income taxes                190,482           (82,906)               392,962          (288,824)

Income tax expense (benefit)                      70,360           (33,464)               149,325          (117,233)
                                           --------------    --------------         --------------    --------------

Net income (loss)                          $     120,122     $     (49,442)        $      243,637     $    (171,591)
                                           ==============    ==============        ===============    ==============


Basic income (loss) per share              $        0.05      $      (0.03)          $       0.10       $     (0.10)
                                           ==============    ==============        ===============    ==============

Diluted income (loss) per share            $        0.05      $      (0.03)          $       0.10       $     (0.10)
                                           ==============    ==============        ===============    ==============
</TABLE>


       The accompanying notes are an integral part of these statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
PML, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY



                                            Class A                                  Class B
                                          Convertible             Common              Common                  (Accumulated
                                        Preferred Shares          Shares              Shares         Additional Deficit)
                                        ------------------ -------------------- ------------------   Paid-in    Retained
                                        SHARES    AMOUNT     SHARES     AMOUNT   SHARES    AMOUNT    Capital    Earnings   Total
                                        ------ ----------- ---------- --------- -------- --------- ---------- ---------- ---------
<S>                                      <C>     <C>        <C>       <C>        <C>     <C>       <C>        <C>        <C>
Balance, May 31, 1997                    4,950   $ 641,561  1,776,816 $  17,768  211,551 $   2,116 $  144,701 $  103,662 $ 909,808
    Preferred Stock dividends accreted              49,499                    -                  -          -    (49,499)        -
    Common Stock returned and canceled                   -       (125)       (1)                 -          1          -         -
    Stock options exercised                              -      3,750        37                  -      1,838          -     1,875
    Net income                                           -                    -                  -          -     38,930    38,930
                                        ------ ----------- ---------- --------- -------- --------- ---------- ---------- ---------
Balance, May 31, 1998                    4,950   $ 691,060  1,780,441 $  17,804  211,551 $   2,116 $  146,540 $   93,093 $ 950,613
                                        ====== =========== ========== ========= ======== ========= ========== ========== =========


Balance, May 31, 1998                    4,950   $ 691,060  1,780,441 $  17,804  211,551 $   2,116 $  146,540 $   93,093 $ 950,613
    Preferred Stock dividends accreted              47,236                                                       (47,236)        -
    Net loss                                             -                                                      (213,601) (213,601
                                        ------ ----------- ---------- --------- -------- --------- ---------- ---------- ---------
Balance, May 31, 1999                    4,950   $ 738,296  1,780,441 $  17,804  211,551 $   2,116 $  146,540 $ (167,744)$ 737,012
                                        ====== =========== ========== ========= ======== ========= ========== ========== =========


Balance, May 31, 1999                    4,950   $ 738,296  1,780,441 $  17,804  211,551 $   2,116 $  146,540 $ (167,744)$ 737,012
    Preferred Stock dividends accreted              36,254                                                       (36,254)        -
    Net Income                                           -                                                       243,637   243,637
                                        ------ ----------- ---------- --------- -------- --------- ---------- ---------- ---------
Balance, February 29, 2000               4,950   $ 774,550  1,780,441 $  17,804  211,551 $   2,116 $  146,540 $   39,639 $ 980,649
                                        ====== =========== ========== ========= ======== ========= ========== ========== =========
</TABLE>

The  accompanying  notes are an integral  part of these  statements.


                                       5

<PAGE>
<TABLE>
<CAPTION>
PML,  INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)





                                                                            For The Nine Months Ended
                                                                           February 29,      February 28,
                                                                              2000              1999
                                                                        ---------------    --------------
<S>                                                                     <C>                <C>
Cash Flows from Operating Activities:
     Net  income (loss)                                                 $      243,637     $    (171,591)
     Adjustments to reconcile net income (loss) to
           net cash provided by (used in) operating activities:
        Depreciation and amortization                                          266,841           311,168
        Gain (loss) on sale of equipment                                             -              (648)
        Changes in:
           Accounts receivable                                                  56,970           142,540
           Inventories                                                         191,871           135,037
           Deferred income taxes                                               141,166          (121,306)
           Other assets                                                         61,542            58,444
           Accounts payable and accrued liabilities                           (376,332)           85,494
                                                                        ---------------    --------------
             Total adjustments                                                 342,058           610,729
                                                                        ---------------    --------------
        Net cash provided by operating activities                              585,695           439,138

Cash Flows (used in) from Investing Activities:
     Proceeds from sale of assets                                                    -             1,150
     Purchase of property, plant and equipment                                (154,606)         (102,311)
                                                                        ---------------    --------------
        Net cash (used in) investing activities                               (154,606)         (101,161)

Cash Flows (used in) from Financing Activities:
     Net payments on bank credit line                                         (122,730)         (212,534)
     Repayment of capital lease obligations                                    (52,944)          (68,775)
     Proceeds from issuance of long-term debt                                        -            24,607
     Repayment of long-term debt                                              (255,986)         (217,679)
                                                                        ---------------    --------------
        Net cash (used in) financing activities                               (431,660)         (474,381)
                                                                        ---------------    --------------
Increase (Decrease) in cash                                                       (571)         (136,404)

Cash at beginning of period                                                        571           163,505
                                                                        ---------------    --------------

Cash at end of period                                                   $            -     $      27,101
                                                                        ===============    ==============


Supplemental Disclosures:
     Interest paid                                                      $      208,984     $     249,228
     Income tax paid                                                             1,950             1,970
     Non Cash Items:
        Preferred stock dividends accreted                                      36,254            35,694
        Accounts payable exchanged for long-term debt                                -            24,607
</TABLE>


           The accompanying notes are an integral part of these statements.

                                       6
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 1.   Financial Statements

     The accompanying  unaudited  consolidated  financial statements include the
accounts of PML, Inc. and its  wholly-owned  subsidiary,  PML  Microbiologicals,
Inc. The Company  produces and sells  diagnostic  microbiology  products used by
both clinical and  industrial  microbiologists  throughout the United States and
Canada.  In  addition,  the  Company  produces a wide  variety of  products on a
private label basis for medical diagnostics companies worldwide.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities and Exchange  Commission  (the  "Commission").  While these financial
statements  reflect  all  necessary,  normal and  recurring  adjustments  in the
opinion of management required to present fairly, in all material respects,  the
financial position,  results of operations and cash flows of the Company and its
subsidiary  at February  29,  2000,  and for the period then ended,  they do not
include all  information  and notes  required by generally  accepted  accounting
principles for complete financial  statements.  Further information is contained
in the annual  financial  statements of the Company and notes  thereto,  for the
year ended May 31, 1999,  contained in the Company's Form 10-KSB, filed with the
Commission  pursuant to the Securities  Exchange Act of 1934.  Operating results
for the three-month  and the nine-month  periods ended February 29, 2000 are not
necessarily indicative of the results that may be expected for the full year.

Note 2.  Net Earnings Per Share

     During the quarter ended February 28, 1998 the Company adopted Statement of
Financial  Accounting  Standards  No. 128,  "Earnings  Per Share" (SFAS 128). As
required by SFAS 128, the Company has applied the  provisions of SFAS 128 to all
periods shown for purposes of computing  earnings per share (EPS). The effect of
equity  instruments is excluded  whenever the impact on earnings per share would
be anti-dilutive.
<TABLE>
<CAPTION>
                                                       Information Needed to Calculate Basic Earnings Per Share

                                                              For the Three Months Ended        For the Nine Months Ended
                                                          February 29,      February 28,      February 29,      February 28,
                                                              2000              1999              2000              1999
                                                          ------------      ------------      ------------      ------------
<S>                                                       <C>               <C>               <C>               <C>
Net income                                                $   120,122       $   (49,442)      $   243,637       $  (171,591)
Preferred stock dividends accreted                            (12,399)          (11,289)          (36,254)          (35,694)
                                                          ------------      ------------      ------------      ------------
Net income (loss) after accretion of dividends            $   107,723       $   (60,731)      $   207,383       $  (207,285)
                                                          ============      ============      ============      ============

Average number of common shares outstanding                 1,780,441         1,780,441         1,780,441         1,780,441
Average number of Class B common stock outstanding            211,551           211,551           211,551           211,551
                                                          ------------       -----------      ------------      ------------

Average shares used in basic EPS calculation                1,991,992         1,991,992         1,991,992         1,991,992
                                                          ============      ============      ============      ============

Basic income (loss) per share                             $      0.05     $       (0.03)      $      0.10       $     (0.10)
                                                          ============      ============      ============      ============
                                       7

<PAGE>
                                                               Information Needed to Calculate Basic Earnings Per Share

                                                               For the Three Months Ended        For the Nine Months Ended
                                                           February 29,      February 28,      February 29,      February 28,
                                                               2000              1999              2000              1999
                                                           ------------      ------------      ------------      ------------
<S>                                                        <C>               <C>               <C>               <C>
Basic income                                               $   107,723       $   (60,731)      $   207,383       $  (207,285)
Add back preferred stock dividends accreted*                       -                 -                 -                 -
                                                           ------------       -----------      ------------      ------------
Diluted income (loss) after add back of accreted dividends $   107,723       $   (60,731)      $   207,383       $  (207,285)
                                                           ============      ============      ============      ============

Average number of common shares outstanding                  1,780,441         1,780,441         1,780,441         1,780,441
Average number of Class B common stock outstanding             211,551           211,551           211,551           211,551
Effect of common stock equivalents                             211,960               -             102,104               -
Effect of preferred convertible stock*                             -                 -                 -                 -
                                                           ------------       -----------      ------------      ------------

Average shares used in diluted EPS calculation               2,203,952         1,991,992         2,094,096         1,991,992
                                                           ============      ============      ============      ============

Diluted income (loss) per share                            $      0.05       $     (0.03)      $      0.10       $     (0.10)
                                                           ============      ============      ============      ============
</TABLE>

*To the extent that the effect of preferred  stock  dividends  accreted,  common
stock equivalents,  and the preferred convertible stock are anti-dilutive,  they
are not included in the diluted  earnings per share  calculation.  For the three
months ended  February 29, 2000 and February  28, 1999,  amounts  excluded  were
$12,399  and  $11,289 of accreted  dividends  respectively,  176,786 and 176,786
shares of preferred  convertible stock  respectively.  For the nine months ended
February  29, 2000 and  February 28,  1999,  amounts  excluded  were $36,254 and
$35,694 of accreted  dividends  respectively,  and 176,786 and 176,786 shares of
preferred convertible stock respectively.


Item 2.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Forward Looking Statements

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations  contains certain forward looking statements that involve a number of
risks and uncertainties.  Future demand for the Company's products is inherently
subject to supply and demand conditions,  and to the unpredictable  decisions of
other market  participants.  There can be no assurance  that sales will increase
generally or within any  specified  product line or that the  Company's  margins
will  stabilize or improve.  Other  elements  that could cause results to differ
materially include competitive pressures and factors listed from time to time in
the Company's reports to the Securities and Exchange Commission,  including, but
not limited to, this report on Form 10-QSB.

Year 2000 Issue

     Starting in September 1996 the Company evaluated, selected, and appointed a
task team to upgrade and install a completely new MIS system. This system is now
operational and it, as well as other internal systems,  were Year 2000 compliant
by the  end of  October  1999.  This  new IT  software  package  controls  major
operational systems including purchasing,  scheduling,  inventory control, sales
and distribution as well as providing the Company's new financial systems.

     As of  the  date  of the  filing  of  this  10-QSB,  the  Company  has  not
experienced any Y2K computer or related problems.  The management of the Company
is very optimistic that future operations will continue to be Y2K problem free.

                                       8

<PAGE>
Canadian Exchange

     PML is a US incorporated company which has significant  operating locations
in Canada.  Since  management  has  previously  determined  that the  functional
currency of the Canadian  operations is the US dollar,  it must  consolidate its
foreign operations by using the appropriate  foreign exchange rate in accordance
with generally  accepted  accounting  principles  applied on a consistent basis.
Unlike most of the Company's US competitors, the Company is in a somewhat unique
position  in that  it  manufactures  in both  the US and  Canada  and  regularly
receives  approximately  40% of its revenues  from Canadian  sales.  In the five
fiscal years ending in 1998, the exchange rate between  Canadian and US currency
has  been  quite  stable  and has not  fluctuated  more  than  about 3% from its
"normal" trading range of about $.72 to $73 (US $ equivalent rate).

     Starting in April 1998, the Canadian/US  exchange rate started an unusually
sharp decline and reached as low as the $.63 range before  stabilizing  at about
$.67 in May 1999. This decline is unprecedented in PML's history and whether the
rate  continues  to  decline,   remains  the  same,  or  starts  to  recover  is
unpredictable.  However,  since the  Company's  Canadian  operations  are such a
significant part of total operations, this decline in the Canadian exchange rate
has had a material adverse impact on the consolidated  financial  results of the
Company.

     The sharp  exchange  decline  started just prior to the  nine-month  period
ended  November  30, 1998 and averaged  $.660  during that  period.  The average
exchange  rate for the  current  nine-month  period  was  $.681,  which does not
represent a significant difference when comparing period operating results.

Accounting Estimates

     The  preparation of the Company's  financial  statements in conformity with
generally  accepted  accounting  principles  (GAAP) requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and reported  amounts of revenues and expenses during the reporting
periods. Actual results often will differ from such accounting estimates. In the
nine-month period ended February 28, 1999, net sales were negatively impacted by
about  $91,000 due to a change in the  customer  credit  estimate.  For the same
period,  cost of goods sold and operating  expenses were negatively  impacted by
nearly  $46,000  reflecting  a change in  inventory  reserves.  The total of the
adjustments  to  these  reserves  increased  the  pre-tax  loss by an  estimated
$137,000 for the nine-month period ended February 28, 1999.

Results of Operations

Nine Months Ended February 29, 2000 Compared to February 28, 1999

     As reported,  income before taxes for the  nine-months  ended  February 29,
2000 showed an increase in profits of $681,786 over the nine-month  period ended
February 28, 1999. On a pro forma basis, if the nine-month period ended February
28, 1999 was  adjusted  for the negative  effect of the  "accounting  estimates"
discussed above, the income before taxes for the nine-months  ended February 29,
2000 would show an increase in profits of $544,786  over the  nine-month  period
ended February 28, 1999.

     When  comparing the two periods on a pro forma basis,  sales have increased
slightly  while cost of goods sold as a  percentage  of sales  improved by 2.2%.
This  significant  improvement is a result of  across-the-board  cost savings in
most  cost-of-goods  areas such as inventory  outdates,  manufacturing  rejects,
material usage, operating overhead,  etc. In addition, the decrease in operating
expenses,  which  amounted to $278,893 or 2.7% of sales,  can be  attributed  to
operational  improvements  and  streamlining  of functions  that occurred in all
categories of operating expenses.  The Company anticipates operating expenses as
a percent  of sales  will

                                       9
<PAGE>
remain constant;  however,  they may increase when appropriate to support higher
company sales and revenues.

     The following table presents the percentage relationship that certain items
in the Company's Consolidated Statements of Operations bear to net sales for the
periods indicated.

                                                  Percent of Sales
                                                 Nine Months Ended
                                                 -----------------
                                          February 29,      February 28,
                                          ------------      ------------

                                              2000               1999
                                              ----               ----

Net Sales                                    100.0%             100.0%
Cost of Goods Sold                            61.5               63.7
                                             ------             ------
Gross Profit                                  38.5               36.3
Operating Expenses                            32.9               36.3
                                             ------             ------
Operating Income                               5.6                0.0
Other Expense                                  1.8                2.8

Income (loss) before income taxes              3.8               (2.8)
Income tax expense                             1.4               (1.1)
                                             ------             ------
Net Income (loss)                              2.4%              (1.7)%
                                             ======             ======

Liquidity and Capital Resources

     The Company has financed its operations over the years principally  through
funds generated from operations and bank loans. At February 29, 2000 the Company
had negative working capital of $463,225  compared with negative working capital
of $615,406 at May 31, 1999. The ratio of current assets to current  liabilities
was 0.88 at February 29, 2000 compared to 0.87 at May 31, 1999.  Quick liquidity
(current assets less  inventories to current  liabilities)  was 0.53 at February
29, 2000 and .51 at May 31, 1999. The twelve month average collection period for
trade  receivables was 54.0 days at February 29, 2000 compared with 52.3 days at
May 31, 1999.

     Net cash provided by operating activities was $585,695.  In the same period
of Fiscal 1999, net cash provided by operations  was $439,138.  Net cash used in
investing  activities  was  $154,606  in the first nine  months of Fiscal  2000,
compared with  $101,161 used by the Company in investing  activities in the same
period  of  Fiscal  1999.  These  expenditures  were  mainly  for  purchases  of
manufacturing  facility  improvements  and  equipment  in Toronto,  Canada,  and
computer  license  upgrades  needed for the  company's new MIS system to support
additional users as the Canadian  locations came on line.  Financing  activities
used cash of  $431,660  in the nine months  ended  February  29, 2000 as the net
result of  repayments  on the bank  credit  line,  repayments  on capital  lease
obligations,  and  repayments  of long term debt.  This compares to cash used of
$474,381 from financing activities in the same period ended February 28, 1999.

     The  Company  has a line of  credit  that has a  current  maturity  date of
November 30, 2000. This line of credit is secured with  substantially all assets
of the Company.  The available amount under the line of credit is based upon 80%
to 85% of the eligible accounts  receivable and 30% to 40% of eligible inventory
at the end of each reporting period, not to exceed $2.5 million.  This loan will
be repaid primarily out of the Company's  receivable  collections and other cash
provided by operating  activities.  As of February 29, 2000, the Company was out
of compliance with one operating covenant required by its lender;  however,  the
lender  waived the breach and modified  the  covenant  through the end of Fiscal
2000, reducing the liability of future breaches.

     The Company's total debt structure at February 29, 2000 is as follows:

                                       10
<PAGE>
<TABLE>
<CAPTION>
                                                                         Long-Term       Current Portion
<S>                                                                    <C>               <C>
     Revolving credit at prime plus 2.0%, due November 30, 2000        $                   $1,591,720
     Capital Lease obligations, due January 2001                                               69,354
     Note payable at prime plus 2.0%, due November 30, 2000                                    83,308
     Note payable at 6%, due May 2005                                      50,000              10,000
     Note payable at 12%, due April 2000                                                       50,205
     Trade A/P converted to notes payable at 6%, due February 2001                            204,704
                                                                       ----------         -----------
     Total Bank and Term debt                                          $   50,000         $ 2,009,291
     Notes payable to related parties                                      35,821             308,166
                                                                       ----------         -----------

     Total long and short term debt                                    $   85,821         $ 2,317,457
                                                                       ==========         ===========
</TABLE>

II.  OTHER INFORMATION

Item 1.   Legal Proceedings

     The Company occasionally has been made a party to incidental suits or other
legal  actions  arising  in the  ordinary  course of its  business.  To the best
knowledge of  Management,  the Company is not  currently  subject to any pending
litigation that would have a material  adverse effect upon its  operations.  The
Company was engaged in discussions with one purchaser concerning product quality
and had notified its product liability  insurance carrier of those  discussions.
To date, the Company has never paid a product liability claim.

Item 4.  Submission of Matters to a Vote of Security Holders

          There  were no matters  submitted  to a vote of the  security  holders
during the quarter ended February 29, 2000.

Item 6.   Exhibits and Reports on Form 8-K

     No 8-K filings were made during the quarter ended February 29, 2000.

Signatures

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                           PML, INC.
                                           (Registrant)


Date:  March 30, 2000                      By:   /s/ Kenneth L. Minton
                                                 ---------------------
Kenneth L. Minton
                                           President and Chief Executive Officer

<TABLE> <S> <C>

<ARTICLE>                     5

<S>                             <C>
<PERIOD-TYPE>                    3-MOS
<FISCAL-YEAR-END>                         MAY-31-2000
<PERIOD-END>                              FEB-29-2000
<CASH>                                                   0
<SECURITIES>                                             0
<RECEIVABLES>                                    2,104,832
<ALLOWANCES>                                        55,592
<INVENTORY>                                      1,478,588
<CURRENT-ASSETS>                                 3,688,323
<PP&E>                                           4,755,605
<DEPRECIATION>                                   3,414,610
<TOTAL-ASSETS>                                   5,518,019
<CURRENT-LIABILITIES>                            4,151,548
<BONDS>                                             85,821
                                    0
                                        774,550
<COMMON>                                            19,920
<OTHER-SE>                                         186,179
<TOTAL-LIABILITY-AND-EQUITY>                     5,218,018
<SALES>                                         10,494,889
<TOTAL-REVENUES>                                10,494,889
<CGS>                                            6,453,895
<TOTAL-COSTS>                                    6,453,895
<OTHER-EXPENSES>                                 3,444,093
<LOSS-PROVISION>                                         0
<INTEREST-EXPENSE>                                 203,939
<INCOME-PRETAX>                                    392,962
<INCOME-TAX>                                       149,325
<INCOME-CONTINUING>                                243,637
<DISCONTINUED>                                           0
<EXTRAORDINARY>                                          0
<CHANGES>                                                0
<NET-INCOME>                                       243,637
<EPS-BASIC>                                           0.00
<EPS-DILUTED>                                         0.00


</TABLE>


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission